ARANETA PROPERTIES INCORPORATED INFORMATION … › pdf › ARA DIS 2014 (v.4) FILED COPY(2).pdfGregorio Ma. Araneta III Filipino 264,472,892 Direct 15.78% PCD Nominee Common Various

ARANETA PROPERTIES

INCORPORATED

INFORMATION STATEMENT (SEC FORM 20-IS)

November 19, 2014

At 9:30 a.m.

21st Floor Citibank Tower, Paseo de Roxas,

Makati City, Philippines

3

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 20-IS

INFORMATION STATEMENT PURSUANT TO SECTION 20

OF THE SECURITIES REGULATION CODE

1. Check the appropriate box:

Preliminary Information Statement

X Definitive Information Statement

2. Name of Registrant as specified in its charter: ARANETA PROPERTIES, INC.

3. 21st Floor, CitibankTower, Paseo de Roxas, Makati City, Philippines

Province, country or other jurisdiction of incorporation or organization

4. SEC Identification Number: 152249

5. BIR Tax Identification Code: 050-000-840-355

6. 21st Floor, CitibankTower, Paseo de Roxas, MakatiCity, Phillipines

Address of principal office Postal Code

7. Registrant’s telephone number, including area code (02) 848-1501 to 04

8. Date, time and place of the meeting of security holders

November 19, 2014; 9:30a.m.; 21st/F Citibank Tower, Paseo de Roxas, MakatiCity

9. Approximate date on which the Information Sheet is first to be sent or given to security

holders on October 27, 2014.

10. Securities registered pursuant to Sections 8 and 12 of the Code or Sections 4 and 8 of

the RSA(information on number of shares and amount of debt is applicable only to

corporate registrants):

Title of Each Class Number of Shares of Common Stock

Outstanding or Amount of Debt

Outstanding

Common Stock, Php1.00

par value

1,561,110,070 shares

11. Are any or all of registrant’s securities listed on a Stock Exchange?

Yes X No _

If yes, disclose the name of such Stock Exchange and the class of securities listed therein:

Philippine Stock Exchange Common shares

4

ARANETA PROPERTIES INCORPORATED

INFORMATION STATEMENT

A. GENERAL INFORMATION

ITEM 1: DATE, TIME AND PLACE OF MEETING OF SECURITY HOLDERS

Date: November 19, 2014

Time: 9:30 a.m.

Place: 21st Floor, Citibank Tower, Paseo de Roxas, Makati City

Principal Office: 21st Floor, Citibank Tower, Paseo de Roxas, Makati City

Approximate Date of Distribution to Security Holders: October 27, 2014.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT

TO

SEND US A PROXY

ITEM 2.DISSENTER’S RIGHT OF APPRAISAL

There are no matters to be acted upon at the meeting involving instances set forth in the

Corporation Code of the Philippines for which a stockholder may exercise the right of

appraisal.

Pursuant to Section 81 Title X, Appraisal Right Corporation Code of the Philippines, any

stockholder of a corporation shall have the right to dissent and demand payment of the fair

value of his shares in the following instances: (1) in case of any amendment to the articles of

incorporation that has the effect of changing or restricting the rights of any stockholder or

class of shares, or authorizing preferences in any respect superior to those of outstanding

shares of any class, or extending or shortening the term of corporate existence; (b) in case of

sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all

of the corporate property and assets, and (c) in case of merger.

Section 82 of the Corporation Code also provides that, this appraisal right may be exercised

by any stockholder who shall have voted against the proposed action, by making a written

demand on the corporation within thirty (30) days after the date on which the vote was taken

for payment of the fair value of his shares. Failure to make the demand within such period

shall be deemed a waiver of the appraisal right. If the proposed action is implemented or

affected, the corporation shall pay to such stockholder, upon surrender of the certificate or

certificates of stock representing his shares, the value thereof as of the day prior to the date on

which the vote was taken, excluding ay appreciation or depreciation in anticipation of such

corporate action.

If within a period of sixty (60) days from the date the corporate action was approved by the

stockholders, the withdrawing stockholder and the corporation cannot agree on the value of

the shares, it shall be determined and appraised by three (3) disinterested persons, one of

whom shall be named by the stockholder, another by the corporation, and the third by the two

5

thus chosen. The findings of the majority of the appraisers shall be final, and their award shall

be paid by the corporation within thirty (30) days after such award is made. No payment shall

be made to the dissenting stockholder unless the bank has unrestricted retained earnings in its

book to cover such payment. Upon payment by the Corporation of the agreed or awarded

price, the stockholder shall forthwith transfer his shares to the Corporation.

From the time of demand for payment of the fair value of a stockholder’s shares until either

the abandonment of the corporate action involved or the purchase of the said shares by the

corporation, all rights accruing to such shares, including voting and dividend right, shall be

suspended, except the right of such stockholder to receive payment of the fair value thereof:

Provided, that if the dissenting stockholder is not paid the value of his shares within 30 days

after the award , his voting right and dividend rights shall immediately be restored (Section 83

of the Corporation Code).

Within ten (10) days after demanding payment of his shares, a dissenting stockholder shall

submit the certificate(s) of stock representing his shares to the Corporation for notation

thereon that such shares are dissenting shares. His failure to do so shall, at the option of the

Corporation, terminate his appraisal right. (Section 86, Corporation Code). No demand for

payment as aforesaid may be withdrawn by the dissenting stockholder unless the Corporation

consents thereto (Section 84, Corporation Code).

The appraisal right shall be exercised in accordance with Title X of the Corporation Code.

ITEM 3. INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS

TO BE ACTED UPON

Other than the election to office, there is no matter to be acted upon during the Annual

Stockholders’ Meeting to which a beneficial owner, director or officer has any substantial

interest.

No director has informed the Company in writing of his intentions to oppose any action to be

taken during the proposed Annual Stockholders’ Meeting.

B. CONTROL AND COMPENSATION INFORMATION

ITEM 4. VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

As of August 31, 2014, there are 1,561,110,070 subscribed, issued and outstanding common

shares entitled to vote at the meeting, with each share entitled to one vote. Out of the said

issued and outstanding common shares, 7,689,599 are owned by foreigners.

All stockholders of record at the close of business hours of October 7, 2014 shall be entitled to

cumulative voting rights with respect to the election of directors. A stockholder may vote such

number of shares for as many persons as there are directors to be elected or he may cumulate

said shares and give one candidate as many votes as the number of directors to be elected

multiplied by the number of his shares, or he may distribute them on the same principle among

as many candidates as he shall see fit: Provided, that the total number of votes cast by him

shall not exceed the number of shares owned by him as shown in the books of the Company as

of October 7, 2014 multiplied by the whole number of directors to be elected.

6

Security Ownership of Certain Record & Beneficial Owners and Management

(1) Security Ownership of Certain Record and Beneficial Owners

There were no delinquent stocks, and the direct and indirect record and beneficial owners of

more than five percent (5%) of the Company’s voting securities as of August 31, 2014 are as

follows:

Title of

Class

Name and Address of

Record owner and

Relationship with Issuer

Name of Beneficial Owner

and Relationship with

Record Owner Citizenship

Number

of Share

Nature of

Ownership

%

Held

Common

Carmel Development,

Inc.

21/F Citibank Tower

Paseo de Roxas, Makati

City

Nominee:

Gregorio Ma. Araneta

III

Filipino

499,999,997

Direct

32.03%

Common

Gamma Properties, Inc.,

21/F Citibank Tower

Paseo de Roxas, Makati

City

Nominee:


III

Filipino

264,472,892

Direct

15.78%

Common

PCD Nominee

Various clients and

Philippine Depository &

Trust Corp. (PDTC)

Filipino

757,257,872

48.51%

Common

LBC Express, Inc.

LBC Compound Aviation

Center, Airport Road,

Pasay City

Nominee:

Santiago Araneta

Filipino

195,043,074

Direct

12.49%

Common

Olongapo Mabuhay

Express Corporation,

LBC Compound Aviation

Center, Airport Road,

Pasay City

Nominee:

Filipino

124,855,422

Direct

8.00%

(2) Security Ownership of Management

The following is a summary of the aggregate shareholdings of the Company’s Directors and

executive officers in the Company and the percentage of their shareholdings as of August 31,

2014:

Title of

Class

Name & Address of

Beneficial Owner

No. of shares &

nature of

Beneficial

Ownership

Citizenship

Nature of

Ownership

Percent of

Class (%)

Common


21/F Citibank Tower, Paseo de

Roxas, Makati City

120,060

499,999,997

(Carmel

Development,

Inc.)

437,929,567

(Gamma

Properties,

Inc.)

Filipino

Direct

Indirect

Indirect

0.0096

7

Indirect

Common

Carlos R. Araneta

RMS 801-802, PSE Plaza, Ayala

Triangle, Ayala Ave., Makati City

21,660

Filipino

r & b

Direct

0.0017

Common Alfonso Araneta


Roxas, Makati City

1 Filipino

r & b

Direct

0.0000

Common

Luis Araneta


Roxas, Makati City

1 Filipino r & b

Direct

0.0000

Common

Perry L. Pe

Romulo Mabanta Law Offices 30/F

Citibank Tower, Paseo de Roxas,

Makati City

1

Filipino

r & b

Direct

0.0000

Common

Alfredo de Borja

Unit 300, Mile long Bldg.

Amorsolo St. Legaspi Village,

Makati City

1

Filipino

r & b

Direct

0.0000

Common Alfredo D. Roa III

119 Avocado Dr., Ayala Alabang,

Muntinlupa City

1 Filipino

r & b

Direct

0.0000

Common Crisanto Roy B. Alcid


Roxas, Makati City

1 Filipino

r & b

Direct

0.0000

Common Santiago Araneta

LBC Compound Aviation Center,

Airport Road,

Pasay City

85,800 Filipino

r & b

Direct

0.0000

TOTAL FOR THE GROUP 0.0113

r – record ownership

b – beneficial ownership

(3) Voting Trust Holders of 5% or More

There is no voting trust or similar arrangement involving the shares of stocks of the Company.

(4) Security ownership of certain beneficial owners and management:

Name of Company Class Number of shares Nature Percentage

Carmel Development, Inc.

(of which 99% held by Gregorio Ma. Araneta III) Common 499,999,997 Direct 32.03%

Gamma Properties, Inc.

(of which 50% held by Gregorio Ma. Araneta III) Common 264,472,892 Direct 15.78%

LBC Express Inc.

(wholly owned by LBC Development

Corporation, of which 25% is owned by Santiago

Araneta) Common 195,043,074 Direct 12.49%

Olongapo Mabuhay Express Corp.

(of which 80% held by Ma. Joy A. Cruz) Common 124,855,422 Direct 8.00%

8

ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS

Except in cases where voting by ballot is applicable, voting and counting shall be viva voce. If

by ballot, the counting shall be supervised by the external auditors and transfer agent of the

Company.

All stockholders of record at the close of business hours of October 7, 2014 shall be entitled to

cumulative voting rights with respect to the election of directors. A stockholder may vote such

number of shares for as many persons as there are directors to be elected or he may cumulate

said shares and give one candidate as many votes as the number of directors to be elected

multiplied by the number of his shares, or he may distribute them on the same principle among

as many candidates as he shall see fit: Provided, that the total number of votes cast by him

shall not exceed the number of shares owned by him as shown in the books of the Company as

of October 7, 2014 multiplied by the whole number of directors to be elected.

(1) Board of Directors and Executive Officers

The incumbent directors, including independent directors and executive officers of the

Company are as follows:

Office

Name

Citizenship

Age

Year of

assumption

of office

No. of

years/

Months

Chairman/CEO/Director Gregorio Ma. Araneta III Filipino 66 1997 17 years

Director/President Crisanto Roy B. Alcid Filipino 45 1997 17 years

Director /Treasurer Carlos R. Araneta Filipino 69 2009 5 years

Director Luis M. Araneta Filipino 29 2012 2 year

Director Alfonso M. Araneta Filipino 30 2013 1 years

Director Perry L. Pe Filipino 53 2003 11 years

Director Alfredo de Borja Filipino 70 2009 5 years

Director Alfredo D. Roa III Filipino 67 2010 4 years

Director Santiago Araneta Filipino 42 2013 1 year

Corporate Secretary Christine P. Base Filipino 44 2007 7 years

Chief Finance Officer Jose O. Eustaquio III Filipino 67 2012 2 year

The above incumbent directors are all nominated for re-election in this year’s Annual

Stockholders’ Meeting per SEC Memorandum Circular No. 2, Series of 2002.

Messers. Alfredo de Borja, Perry L. Pe, Alfredo Roa III are not representatives of the

following substantial shareholders: Carmel Development, Inc., Gamma Properties, Inc. and

Olongapo Mabuhay Express Corporation, and LBC Express, Inc.

For the term 2014-2015, Carmel Development, Inc. and Gamma Properties, Inc. through Mr.

Gregorio Ma. Araneta III nominated Luis M. Araneta, Alfonso Araneta, Crisanto Alcid, and

Alfredo De Borja; Olongapo Mabuhay Express Corp. through Mr. Carlos D. Araneta

nominated Santiago Araneta, Perry L. Pe and Afredo D. Roa, III.

9

The amended by-laws of the Company include the guidelines and procedures in the

nomination and election of independent directors.

The following are the rules in the nomination and election of independent directors:

a. The Nomination Committee shall have at least three members (3) members, one of

whom is the independent director.

b. Nomination of independent director/s shall be conducted by the committee prior to a

stockholders’ meeting. All recommendations shall be signed by the nominating

stockholders together with the acceptance and the conformity of the would-be-

nominees.

c. The Committee shall pre-screen the qualifications and prepare a final list of candidates

and put in place screening policies and parameters to enable it to effectively review the

qualifications of the nominees for independent director/s.

d. After the nomination, the committee shall prepare a final list of candidates which shall

contain all the information about the nominees for independent directors, as required

under SRC Rule 12, which list shall be made available to the commission and to all

stockholders through the filing and distribution of the Information Statement, in

accordance with SRC Rule 20, or in such other reports the company is required to

submit to the Commission. The name of the person or group of person who

recommended the nomination of the independent director shall be identified in such

report including any relationship with the nominee.

The nomination committee is composed of the following:

Chairman: Alfredo de Borja;

Members: Gregorio Ma. Araneta III;and

Crisanto Roy B. Alcid

DIRECTORS AND EXECUTIVE OFFICERS

The following are the business experience and positions held by the Directors and Executive

Officers for the past five (5) years:

GREGORIO MA. ARANETA III, 66 years old, Filipino, is the Chairman and Chief

Executive Officer of Araneta Properties, Inc. He is President and Chairman of ARAZA

Resources Corporation and Carmel Development Corporation, Chairman of Gregorio Araneta

Inc., Gregorio Araneta Management Corporation, and Gamma Holdings Corporation. He is

also a director of ISM Telecommunications, Inc. Mr. Araneta studied at the University of San Francisco and Ateneo de Manila University where he earned his Bachelor of Arts Degree in

Economics.

CRISANTO ROY B. ALCID, Filipino, 45 years old, is currently the President of Araneta

Properties, Inc. He is also the President of Envirotest Inc. and Roycomm Holdings, Inc. He

holds directorship in various companies namely: Carmel Development Corporation, Gregorio

Araneta, Inc., ARAZA Resources, Inc. HE. Heacock Corporation, Gamma Holdings, Midrac

10

Realty, Inc., and Philippine Coastal Storage & Pipeline Corporation. Formerly, he was

connected with Ayala Land, Asiatrust Development Bank and Citibank N.A. Mr. Alcid

obtained his degree in Bachelor of Science in Management Engineering from Ateneo de

Manila University and has completed the General Management Program at the Harvard

Business School.

LUIS M. ARANETA, Filipino, 29 years old, is currently the Business Development Manager

of Araneta Properties, Inc. He was elected Director of the Company in 2012. He is the

President of Estancias Holdings, Inc. and Cerros Corp, Vice-President and Treasurer of

ARAZA Resources Corporation, Director and Corporate Secretary of Carmel Development,

Inc, Director of PAGREL, Inc., and Corporate Secretary of Gamma Properties, Inc. Mr.

Araneta studied at the Pace University in New York City where he earned his degree in

Business Administration in Management.

CARLOS R. ARANETA, 69 years old, Filipino, is one of the Directors and the Treasurer of

the Company. He was the Chairman of the Board of the following local companies: LBC

Properties, Inc., LBC Development Corporation, LBC Development Bank, Inc., LBC Express,

Inc., LBC Mabuhay Development Philippine Corporation, LBC Domestic Franchise Co., Inc.,

and LBC Airways, Inc. He was the Chairman of the Board of LBC Holdings USA Corp., LBC

Mabuhay USA Corp., LBC Mabuhay North America Corp., LBC Mabuhay Hawaii Corp.,

LBC Mabuhay Saipan Corp., LBC Mabuhay Italy Corp., and LBC Travel USA Corp. Mr.

Araneta holds a Bachelor of Science Degree in Business Administration from Boston

University. He earned his Bachelor of Laws Degree at the Ateneo de Manila University Law

School.

ALFREDO DE BORJA, 70 years old, Filipino, is one of the Directors of the Company. He is

the President of Makiling Ventures, Inc. and E. Murio, Inc. He also holds directorship in

various corporations such as ICCP Ventures, Inc., ICCP Management Corp., Rustans

Supercenters, Inc., RFM-Science Park of the Phils., Regatta-Beacon Land Corp., Regatta

Properties, Inc., Pueblo de Oro Development Corp., and Cebu Light Industrial Park, Inc. Mr.

de Borja graduated in Ateneo de Manila University, where he obtained his degree in Bachelor

of Science in Economics. He earned his Masters in Business Administration from Harvard

University.

PERRY L. PE, 53 years old, Filipino, is one of the Directors of the Company. He is also a

Director of Delphi Group, Inc., Oriental Petroleum & Minerals Corp., and Ace Saatchi &

Saatchi Philippines, Inc., He is a Partner in Romulo, Mabanta, Buenaventura, Sayoc & De Los

Angeles Law Firm.

ALFONSO M. ARANETA, Filipino, 30, is currently the Executive Vice-President and

Director of Envirotest, Inc., Vice President and Director of Carmel Development, Inc., Vice-

President and Director of Gregorio Araneta, Inc. Concurrently, he is a Director of ARAZA

Resources Corp., ATSI PETC, Inc. Pagrel, Inc., Gamma Properties, Inc., Securicor Security

Investigation Services, Inc., and Alumma Foods, Inc. Mr. Araneta graduated at De La Salle-

College of St. Benilde, Manila where he earned his degree in Bachelor of Science in Business

Administration.

11

ALFREDO D. ROA III, 67 years old, Filipino, is one of the Directors of the Company. He

is presently the President of Inland Corporation and Chairman of JJB Inland Logistics, Inc.

SANTIAGO G. ARANETA, Filipino, 42, is the Chairman and CEO of LBC Express, Inc.,

the largest cargo, courier and remittance company in the Philippines. He is also the Chairman

of LBC Mabuhay Hawaii Corporation, LBC Mabuhay Saipan Corporation and LBC Holdings

USA Corp., Director and President of Rudy Project Philippines, a Director and Treasurer of

LBC Properties Inc., a Director for Advanced Global Systems Inc. and LBC Mundial Inc. and

Executive Vice President of LBC Development Corporation.

Mr. Araneta is likewise one of the Trustees of LBC's foundation, LBC Hari ng Padala

Foundation, Inc. He is also the Chairman of the United Football League, the Philippines'

premier professional football league. For the year 2013, Santiago Araneta was nominated as

Ernst and Young's CEO. Since 2003, he has been an active member of the Philippine chapter

of the Entrepreneur Organization. Mr. Araneta graduated in De La Salle University, Manila

where he obtained his degree in Bachelor of Arts Major in Management.

CHRISTINE P. BASE, Filipino, 44 years old, is the Corporate Secretary of Araneta

Properties, Inc. and is currently a Corporate and Tax Lawyer at Pacis and Reyes, Attorneys

and the Managing Director of Legisforum, Inc. She is a Director and Corporate Secretary of

Anchor Land Holdings, Inc. and the Corporate Secretary of Asiasec Equities, Inc. and AG

finance Inc. She is also director and corporate secretary of several private corporations. She

was an Auditor and then Tax Lawyer at Sycip, Gorres, Velayo&Co. She is a graduate of

Ateneo De Manila University School of Law with a degree of Juris Doctor. She passed the Bar

Examination in 1997. Ms. Base is also a Certified Public Accountant. She graduated from De

La Salle University with a Bachelor of Science Degree in Commerce Major in Accounting.

JOSE O. EUSTAQUIO, III, Filipino, 67 years old, is presently the Chief Financial Officer

of Araneta Properties, Inc. He was a consultant of Honda Cars Makati and Honda Cars Cebu

from 2007 to 2008. In 1987, he was the Financial Control Officer of Ayala Corporation

(Control and Analysis Division). He was the Chief Finance Officer of Ayala Corporation for

Ayala Theaters Management, Inc., Ayala Property Management Corporation, and Ayala

Alabang Commercial Corporation from 1982 to 1987. He was a staff Auditor of Sycip,

Gorres, Velayo & Co. Mr. Eustaquio is a Certified Public Accountant. He graduated from

Philippine School of Business Administration with a Bachelor of Science Degree in

Commerce Major in Accounting.

(2) Independent Directors

Three (3) incumbent Directors, namely Messrs. Perry L. Pe, Alfredo de Borja, and Alfredo D.

Roa, III were independent directors of the Company for the year 2013-2014. They are not

employees of the Company and have no relationship with the Company which would interfere

with the exercise of independent judgment in carrying out the responsibility of an independent

director.

The following are nominated for election to the Board of Directors during this year’s Annual

Stockholders’ meeting:

1. Gregorio Maria Araneta III Director

2. Carlos R. Araneta Director

12

3. Crisanto Roy B. Alcid Director

4. Luis M. Araneta Director

5. Alfonso M. Araneta Director

6. Perry L. Pe Independent Director

7. Alfredo de Borja Independent Director

8. Santiago Araneta Director

9. Alfredo D. Roa, III Independent Director

For the term 2014-2015, Carmel Development, Inc. and Gamma Properties, Inc. through Mr.

Gregorio Ma. Araneta III nominated Alfredo De Borja; Olongapo Mabuhay Express Corp.

through Mr. Carlos D. Araneta nominated Perry L. Pe and Alfredo D. Roa, III. The

independent directors are not related with the persons nominating them by consanguinity or

affinity, and have no professional or business dealings with any of them.

The term of office of all directors, including independent directors shall be one (1) year until

their successors are duly elected and qualified.

(3) Family Relationships

Mr. Luis M. Araneta and Mr. Alfonso M. Araneta are the sons of Mr. Gregorio Ma. Araneta

III. While Messrs. Gregorio Ma. Araneta III and Carlos R. Araneta are related to the fourth

civil degree of consanguinity. Mr. Santiago Araneta is the son of Mr. Carlos Araneta. There

are no family relationships within the fourth degree among the rest of the members of the

Board of Directors and Senior Officers of the Company.

(4) Involvement in Certain Legal Proceedings

To the knowledge of the Company, there has been no occurrence of any of the following

events during the past five (5) years up to the present which are material to an evaluation of

the ability and integrity of any director, any person nominated to become director, executive

officer or control person of the Company:

1. Any insolvency or bankruptcy petition filed by or against any business of which such

person was a general partner or executive officer whether at the time of insolvency or

within two (2) years prior to that time;

2. Any conviction by final judgment in a criminal proceeding, domestic or foreign, in any

criminal proceeding, domestic or foreign, excluding traffic violations and other minor

offenses.

3. Any final and executory order, judgment or decree of any court of competent

jurisdiction, domestic or foreign, permanently or temporarily, enjoining, barring,

suspending or otherwise limiting involvement in any type of business, securities,

commodities or banking activities; and

4. Any final and executory judgment by a domestic or foreign court or competent

jurisdiction (in a civil action), the SEC, or comparable foreign body, or domestic or

foreign exchange or electronic marketplace or self regulatory organization, for

violation of a securities or commodities law.

There are no legal proceedings to which the Company or its subsidiary or any of their

properties are involved in or subject to any legal proceedings which would have material

effect or adverse effect on the business or financial position of the Company or its subsidiary.

13

(5) Significant Employees

The Company currently has no significant employees.

(6) Certain Relationships and Related Transactions

Mr. Luis M. Araneta and Alfonso Araneta are the sons of Mr. Gregorio Ma. Araneta III.

Messrs. Gregorio Ma. Araneta III and Carlos R. Araneta are related to the fourth civil degree

of consanguinity. Mr. Santiago Araneta is also the son of Mr. Carlose Araneta. There are no

family relationships within the fourth degree among the rest of the members of the Board of

Directors and Senior Officers of the Company.

As of June 30, 2014, there are no directors or officers who own ten percent (10%) or more of

the outstanding shares of the parent company.

There were no business arrangement and related party transaction and/or ongoing contractual

or other commitments as a result of the arrangement pursuant to disclosure requirement of

SFAS/IAS 24.

There were no related party transactions as at end of December 31, 2013.

ITEM 6. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

(1) Compensation Table

The following is a summary of the aggregate compensation paid or accrued during the year

2012 and 2013 and to be paid in the ensuing fiscal year 2014 to the Company’s Chief

Executive Officer and the next most highly compensated officers who is individually named

below and to all other officers and directors of the Company as a group:

Name and Principal

Function

Fiscal

Year Salary Bonus

Other

Compensation

Gregorio Ma. Araneta III *

Chairmanand CEO

2012

2013

2014

Crisanto Roy Alcid*

President

2012

2013

2014

Luis M. Araneta

Director

2012

2013

2014

RhoanPurugganan*

Legal Head

2012

2013

2014

Jose O. Eustaquio III**

Chief Finance Officer

2012

2013

2014

TOTAL FOR THE GROUP 2012

2013

2014**

7,420,000.00

10,126,800.00

10,126,800.00

Other Officers as a group

unnamed

2012

2013

2014**

3,835,200.00

5,624,000.00

5,624,000.00

14

* Key officers, ** Figures in Year 2014 were based on estimates

(2) Compensation of Directors and Officers

(a) Standard Arrangements

Compensation of the Chief Executive Officer and Managers of the Company are accrued and

paid for the years 2012, 2013 and 2014. All other directors of the Company assumed their

positions and served the Company without any compensation. The Company also does not

provide any per diem to its directors.

(b) Other Arrangements

No compensatory arrangements were executed during the last three (3) years of operations

other than the compensation arrangements mentioned above.

(3) Employment Contracts and Termination of Employment and Change-in-Control

Arrangements

Employment contracts of all supervisors and rank in file employees are standard.

The remuneration committee is composed of the following:

Chairman: Alfredo de Borja

Members: Carlos R. Araneta; and

Gregorio Ma. Araneta III

ITEM 7. INDEPENDENT PUBLIC ACCOUNTANTS

Sycip, Gorres, Velayo and Co. was the Independent Public Accountant for the year 2013-

2014. The reappointment of the said accounting firm as Independent Public Accountant for the

incoming year will be submitted to the stockholders for their confirmation and approval. The

Partner-in-charge, John T. Villa, has been appointed as the Partner-in charge for the audit year

2013-2014.The duly authorized representatives of Sycip, Gorres, Velayo and Co. are expected

to be present at the Annual Meeting of Stockholders and they will have the opportunity to

make statements if they desire to do so and are expected to be available to respond to

appropriate questions.

Pursuant to the existing regulation of the Securities and Exchange Commission, the registrant

shall change its external auditor or rotate the engagement partner every five years. This is in

compliance with the rotation requirement of its external auditor’s certifying partner as

required under SRC Rule 68(3) (b) (iv). Considering that the assigned partner of Sycip,

Gorres, Velayo and Co. has been the Company’s independent public accountant for only two

(2) year since year 2012, rotation is not necessary for the years 2014-2015.

The audit committee is composed of the following:

Chairman: Alfredo de Borja

Members: Gregorio Ma. Araneta III; and

Carlos Araneta

15

COMPENSATION PLANS

No action with respect to any plan pursuant to which cash or non-cash compensation may be

paid or distributed for the year shall be discussed during the meeting.

C. ISSUANCE AND EXCHANGE OF SECURITIES

ITEM 8. AUTHORIZATION OR ISSUANCE OF SECURITIES OTHER THAN FOR

EXCHANGE

The Company intends to enter into private placement agreements in order to fund its land

banking activities. The Company will use the funds to acquire and develop real properties.

The Company will issue common shares of up to 25% of the Company’s total issued and

outstanding common shares.

The Company shall present to its stockholders for approval the issuance of shares of stock of

up to 25% of the Company’s total issued and outstanding capital stock, and the delegation to

the board of directors the determination of the terms, and other details in relation to the said

issuances.

Common stocks are entitled to dividends, but their right to exercise its pre-emptive right has

been denied by the Company’s Articles of Incorporation.

ITEM 9. MODIFICATION OR EXCHANGE OF SECURITIES

There are no matters or actions to be taken up in the meeting with respect to the modification

of any class of the Company’s securities or the issuance of authorization for issuance of one

class of the Company’s securities in exchange for outstanding securities of another class.

ITEM 10. FINANCIAL AND OTHER INFORMATION

The audited financial statements as of December 31, 2013, Management’s Discussion and

Analysis, Market Price of Shares and Dividends and other data related to the Company’s

financial information are attached hereto as Annex “A”.

ITEM 11. MERGERS, CONSOLIDATIONS, ACQUISITIONS AND SIMILAR

MATTERS

There are no matters or actions to be taken up in the meeting with respect to merger,

consolidation, acquisition by, sale or liquidation of the Company.

ITEM 12. ACQUISITION OR DISPOSITION OF PROPERTY

There are no matters or actions to be taken up in the meeting with respect to acquisition or

disposition of any property by the Company.

16

ITEM 13. RESTATEMENT OF ACCOUNTS

The Company is not taking any action, which involves the restatement of any of its assets,

capital, or surplus account.

D. OTHER MATTERS

ITEM 14. ACTIONS WITH RESPECT TO REPORTS

(1) Approval of the Annual Stockholders Meeting held on November 20, 2013.

The minutes of the previous Stockholders’ Meeting held last November 20, 2013 shall be

presented to the stockholders for approval. Items are as follows:

1. Call to order;

2. Proof of notice and due calling of meeting; Determination of a quorum;

3. Approval of Minutes of the Annual Stockholder’s Meeting held on November 21,

2012;

4. Report of the President;

5. Presentation and approval of the Financial Statements as of December 31, 2012;

6. Ratification of the acts of the Board of Directors and Officers;

7. Election of members of the Board of Directors;

8. Appointment of External Auditors;

9. Other Matters;

10. Adjournment.

(2) Resolutions for Ratification by the stockholders

Resolutions of the Board of Directors for ratification are the elections of new directors and officers,

approval of financial statements. Approval and ratification of the minutes, reports, resolutions, and

acts will constitute approval of the matters therein.

ITEM 15. MATTERS NOT REQUIRED TO BE SUBMITTED

Other than election to office, there is no matter to be acted upon during the Annual Stockholders’

Meeting to which a beneficial owner, director or officer has any substantial interest.

No director has informed in writing of his intentions to oppose any action to be taken during the

proposed Annual Stockholders’ meeting.

ITEM 16. AMENDMENT OF CHARTER, BY-LAWS OR OTHER DOCUMENTS

There are no proposed amendment of the Company’s charter, by-laws, and other documents.

ITEM 17. OTHER PROPOSED ACTIONS

There are no other proposed actions to be taken up in the meeting.

ITEM 18. VOTING PROCEDURES

Except in cases where a higher vote is required under the Corporation Code, the approval of any

corporate action shall require the majority vote of all the stockholders present in the meeting, if

constituting a quorum.

17

Except in cases where voting by ballot is applicable, voting and counting shall be viva voce. If by

ballot, the counting shall be supervised by the external auditors and transfer agent of the Company.

All stockholders of record at the close of business hours on October 7, 2014 shall be entitled to

cumulative voting rights with respect to the election of directors. A stockholder may vote such number

of shares for as many persons as there are directors to be elected or he may cumulate said shares and

give one candidate as many votes as the number of directors to be elected multiplied by the number of

his shares, or he may distribute them on the same principle among as many candidates as he shall see

fit: Provided, that the total number of votes cast by him shall not exceed the number of shares owned

by him as shown in the books of the Company as of October 7, 2014 multiplied by the whole number

of directors to be elected.

All proxies must be in the hands of the Secretary at least ten (10) days before the time set for

the meeting. Such proxies filed with the Secretary may be revoked by the stockholders either

in an instrument in writing duly presented and recorded with the Secretary prior to a scheduled

meeting or their personal attendance at the meeting. (Par. 2 Section7, By-Laws).

A forum for validation of proxies chaired by the Corporate Secretary or Assistant Corporate

Secretary and attended by the Stock and Transfer Agent shall be convened seven (7) days

before any meeting. Any questions and issues relating to the validity and sufficiency, both as

to form and substance, of proxies shall only be raised during said forum and resolved by the

Corporate Secretary. The Corporate Secretary’s decision shall be final and binding upon the

shareholders. Any such question or issue decided upon by the Corporate Secretary shall be

deemed settled and those not brought before said forum shall be deemed waived and may no

longer be raised during the stockholder’s meeting. (Par. 3 section 7, By-Laws)

Except in cases where a higher vote is required under the Corporation Code, the approval of

any corporate action shall require the majority vote of all the stockholders present in the

meeting, if constituting a quorum.

Except in cases where voting by ballot is applicable, voting and counting shall be viva voce. If

by ballot, the counting shall be supervised by the external auditors and transfer agent of the

Company.

EXHIBIT

Exhibit I – The Management Report which includes, among others, A Statement of

Management’s Responsibility for the Financial Statements, the Audited Financial Statements

ending December 31, 2013 and Interim Financial Statements ending June 30, 2014 are hereby

attached and incorporated as Exhibit A.

A COPY OF THE COMPANY’S ANNUAL REPORT ON SEC FORM 17-A WILL BE

PROVIDED WITHOUT CHARGE TO EACH PERSON UPON WRITTEN REQUEST

OF ANY SUCH PERSON ADDRESSED TO:

THE OFFICE OF THE CHIEF FINANCE OFFICER

ARANETA PROPERTIES

21st Floor, Citibank Tower, Paseo de Roxas, Makati City

19

MANAGEMENT REPORT

BUSINESS AND FINANCIAL INFORMATION

BRIEF DESCRIPTION OF GENERAL NATURE AND SCOPE OF BUSINESS

OVERVIEW

The Company was formerly known as Integrated Chrome Corporation (INCHROME)

organized on June 15, 1988 and its principal business was to mine chrome ore and produce

ferro silicon metal or commonly known as ferrochrome. Inchrome stopped its smelting

operations in January 1996 because of the depressed ferrochrome market and increasing

production costs. In September 1996, the stockholders and the Board of Directors approved

the following changes in the Company’s business and structure:

a.1) Changed the corporate name from INCHROME to Araneta Properties, Inc.

a.2) Amended the primary purpose of business to land and property development and

maintained the smelting operations as a secondary purpose;

a.3) Removal of stockholders’ pre-emptive right;

a.4) Changed the par value from P0.30 to P1 per share;

a.5.) Increased the authorized capital stock from P300,000,000 (divided into 1 billion

shares with a par value of P0.30 per share) to P5,000,000,000 (divided into 5 billion

shares with a par value of P1 per share); and

a.6) Removed the classification of shares of stock.

Since its inception, the Company has not gone through any bankruptcy, receivership or similar

proceeding.

There has been no material reclassification, merger, consolidation, or purchase or sale of a

significant amount of assets not in the ordinary course of business, except for the sale of the

properties owned but no longer used in business classified under “Other Assets” (the “Smelter

Plant”) account in the Balance Sheet which was sold on May 28, 2005 to a domestic

corporation (PGMC) via a Conditional Deed of Sale on an installment basis for a period of (7)

seven years with the amortization to start on April 2006. .

Araneta Properties, Inc. (ARA), is listed in the Philippine Stock Exchange. It is now primarily

engaged in the fine-tuning of a master plan for the development of approximately 248.113

hectares of prime real estate located in San Jose del Monte, Bulacan.

The major components of the master plan consists of upper-middle to high-end residential lots

and townhouses complemented by a leisure center, principal of which, is a country club, a

commercial center and university center. Additional components of the plan include a nature

park, corporate business center and mass housing.

The aforesaid project is the first big property development project in the northern portion of

Metro Manila. Thus, there is no major industry or geographic competition.

20

The distribution method of the products or real property is being handled by Orchard Property

Marketing.

No problems are foreseen as far as suppliers are concerned, since all the materials needed for

property development are 100% available locally.

An integral part of the master plan is the planned joint venture project which would enable the

Company to work together with foreign and local companies with expertise in land

development projects.

There are no other transactions with and/or dependence on related parties, except for the

advances made from stockholders for the Company’s working capital requirements.

Since the primary business of the Company is to develop and sell real properties, it needs the

following governmental approvals:

(1) Locational Clearance Certificate (LCC-Issued and Approved)

(2) License to Sell (HLURB-Issued and Approved)

As the Company’s master plan is almost complete, the amount or the actual value of the

research and actual development cost shall be determined in the final phase of the master plan.

As of June 30, 2014, the engineering department reported percentage completion detaled

below:

Percentage of Completion As of June 30, 2014 As of June 30, 2013

Phase I 97% 94%

Phase II 98% 92%

Phase III 72% 36%

Club House / Sports Center 98% 98%

Cost and effects of the compliance with environmental laws:

a) Total project cost shall be accounted upon completion of the master plan.

b) Locational Clearance has already been approved/issued by the local government.

Recent Sales of unregistered securities

(a) Securities sold – No unregistered securities have been sold during the fiscal year last

ended.

(b) Underwriter and other purchases – Not applicable

(c) Exemption from registration claimed – None/not applicable

The total number of officers, managers, consultants and regular employees as of June 30, 2014

are as follows:

Legal officer - - - - - - - - - - 1

Managers - - - - - - - - - - - - 6

Consultants - - - - - - - - - - - 3

Supervisors, Rank and File - 42

Total number of employees - 52

21

Employees & consultants described above does not include stock-transfer agent and as well as

auditors.

FINANCIAL AND OTHER INFORMATION

Management’s Discussion and Analysis of Plan of Operation

Basis of Presentation

The financial statement of Araneta Properties, Inc. has been prepared using the historical cost basis

and are presented in Philippine Peso (P).

Statement of Compliance

The financial statements have been prepared in compliance with the Philippine Financial Reporting

Standards (PFRS)

Financial Condition 2012-2013

The Company’s total assets decreased at P=1,482,068,780 in year 2013, as compared with P=

1,492,042,253 in 2012. The changes from the total assets is attributable to the cost of sold during

the year.

The cash balance of P=17.729 million as at end of December 31, 2013 changed from P=15.052

million in 2012. The cash with banks earns interest at the respective bank deposits. Short-term

investments are made for varying periods up to three (3) months depending on the immediate cash

requirements of the Company and earn interest at the respective short-term deposit rates. Interest

income earned from cash in bank and short-term investments amounted to P=92,057.00, P=

335,006.00, and P=343,375.00 for the years ended December 31, 2013, 2012 and 2011 respectively.

The movement of cash is attributable to the net cash flows generated by the Company in its

operating activities.

The receivables increased by 8.91% from P=166.153 million in 2012 as compared to 2013 which is

P=180.950 million. Trade receivables mainly represent the Company’s outstanding balance in its

share in the sale of real estate by SLRDI. Collections of interests and penalties arising from late

payment of these receivables are recognized as part of “Others” in the “Revenue and Other

Income” section in the statements in comprehensive income. Installment receivables pertain to

uncollected portion of the amount arising from the sale of non-operating properties in 2005. The

contract price is collectible in fixed monthly payment of P=2.00 million starting January 24, 2006.

Installment receivables were discounted using the credit-adjusted risk-free rates prevailing at the

time of the sale which resulted to an effective interest rate of 9.45%. Interest income from

accretion recognized in 2013, 2012 and 2011 amounted to P=0.08 million, P=0.20 million and P=1.42

million, respectively. The Company recognizes full allowance on these receivables while they are

currently on the process of renegotiating with the management of Platinum Group Metal

Corporation (PGMC) with respect to the settlement of the outstanding balance of the installment

receivables.

The Real Estate for Sale and Development decreased from P=1,157,778,227 million and P=

1,117,236,418 million in 2012 and 2013 respectively. The movement in the Real Estate for sale

and development is attributable to the cost of sold during the period. As of June 30, 2014, the

residential areas of Phase 1, Phase 2, Phase 3 and the Country Club are 97%, 98%, 72% and 98%

completed, respectively, based on the physical completion report provided by the joint venture’s

supervising engineer.

22

A decrease in the Property and Equipment account pertains to the recognition of depreciation

expense by the Company amounting to P=2.949 million partially offset by acquisition of additional

property and equipment in the amount of P=1.334 million.

The decrease in accounts payable and accrued expenses account was basically caused by normal

recording of accrual of payables vis-a-vis payments.

The movement of Output VAT account represents normal recording of Input and Output VAT.

There was no movement in the number of issued shares as at end of June 30, 2014.

The Company has recorded a Net Income before income tax of P=33.837 million in 2013, P=41.422

million in 2012 and P=4.096 million in 2011.

Status of Operation

The Company’s sales output during the period remains slow as compared with that of the second

quarter of the previous year. Said performance is a result of marketing strategies being

implemented. More specifically, the holding of some inventory in line with price watch which

shows higher forecast of demand in the real estate within the locality, evidenced by the launching

of real estate projects of Ayaland Development, Inc. as well as the Avida Land, Inc. in San Jose

Del Monte, Bulacan area were done.

The Company posted sales during the quarter amounting P45.518 million as compared with

P46.803 million of the same period last year. The decrease in sales was the effect of marketing

strategy being implemented by the Company which some of the inventory is temporarily put on-

hold waiting for much better price.

As of June 30, 2014, the residential areas of Phase 1, Phase 2, Phase 3 and the Country Club are

97%, 98%, 72% and 98% completed, respectively, based on the physical completion report

provided by the joint venture’s supervising engineer.

Originally, it was allocated for Golf Course but was realigned and reclassified as Phase 2

residential subdivision to be complemented by a country club.

The regular cash flow requirements of the Company for the next twelve (12) months shall be

funded mainly from collection of its regular monthly revenue from real estate project.

OPERATION

Results of Operation (January – June 30, 2014 vs. January – June 30, 2013)

The Company sales output during the period remains slowd as compared with that of the second

quarter of the previous year. This performance is a result of marketing strategies being

implemented specifically, the holding of some inventory in line with price watch which shows

higher forecast of demand in the real estate within the locality, evidenced by the launching of real

estate projects of Ayaland Development, Inc. as well as the Avida Land, Inc. in San Jose Del

Monte, Bulacan area.

The percentage of revenues during each of the last two (2) quarters ending June 30, are as follows:

Particulars Year 2014 Year 2013

Sale from Real Estate 83,020,298 91,915,736

23

Cost of Land 24,043,045 27,411,608

Percentage of revenue 51.84% 53.81%

The deficit stands at P503.023 million and P513.990 million as of June 30, 2014 and 2013,

respectively.

In Million June 30, 2014 June 30, 2013

Revenue P47.323 P50.379

Direct Costs P24.043 P27.411

Gross Profit Margin P23.280 P22.967

Operating Expenses P11.791 P10.174

Net Income before tax P11.489 P12.793

The revenue generated during the second quarter of 2014 represents share from sales of Joint

Venture Project with SLRDI. The decrease in sales was the effect of marketing strategy being

implemented by the Company which some of inventory is put on-hold (temporarily) to sell to

market awaiting for much better price.

Liquidity and Capital Resources

The Company posted net profit during the second quarter of 2014, a benefit from construction of

the Clubhouse and Sports Center which the project engineer in-charge of the development has

reported 98.76% complete as of June 30, 2014.

Particulars June 30, 2014

(In Million)

June 30, 2013

(In Million)

Total assets as of P1,387.542 P1,490.085

Total liabilities as of P175.810 P286.663

Ratio of assets to liabilities 12.670% 19.238%

Financial Condition

Cash and cash equivalent P27.852 P14.439

Receivable P200.504 P201.793

Real estate for sale and development P1,079.739 P1,109.245

Property and equipment P19.486 P20.464

Deferred income tax assets P13.415 P16.627

Investment property P5.444 P5.444

Other assets P41.102 P122.074

Loans payable P0.000 P211.248

Deposits on subscription P120,747 P0.000

Other payables P55,153 P75.415

Stockholders’ equity P1,211.732 P1,203.422

24

Capital Expenditure

There was no capital expenditure for the period under review.

Key Performance Indicators

The Company operates in one business segment, the real estate. The Following Key Performance

Indicators were adopted by the corporation in order to measure the profitability of the Company

and to provide management with a measure on the financial strength, liquidity and ability to

maximize the value of its stockholders’ investments.

For the six months ending June 30, 2014 June 30, 2013

Current Ratio (1) 24.11 : 1 34.88 : 1

Debt to Equity Ratio (2) 1 : 14.51 1 : 23.82

Earnings per Share (3) 1 : 0.00703 1 : 0.00931

Earnings before interest

and Income Taxes (4)

P15.667 million

P20.764 million

Return on Equity (5) 0.00905 0.01208

1) Current Assets : Current Liabilities

2) Total Liabilities : Stockholders’ Equity

3) Net Income : Outstanding Shares

4) Net Income plus Interest Expenses and Provision for Income Tax

5) Net Income : Average Stockholder’s Equity


The present business trend in the country shows a very bright scenario in all aspect, including the

real estate sector and there is a strong interest in eyeing to develop new areas adjacent to Metro

Manila including San Jose Del Monte, Bulacan.

This scenario will strongly influence the real estate opportunities in the area. In anticipation of this,

the company boasted its land banking activities resulting in acquisitions of land parcels owned by

Don Manuel Corporation on August 24, 2012 of 388,541 square meters. Another contract was

concluded and signed on December 19, 2012 with BDO Strategic Holdings, Inc., for the

acquisition of more or less 926.550 square meters.

The Company is optimistic that the value of the land shall dramatically be increased due to the

large amount of percentage of completion from its development and eventually would generate the

Company a profit margin.

PARTICULARS

For the Quarter

Ended June 30, 2013

(In Million)

For the Quarter

Ended June 30, 2012

(In Million)

Revenue

50.378

36.771

Direct Costs

27.414

24.873

Gross Profit Margin

22.964

11.898

25

Operating Expenses 10.172 7.847

Net Income (Loss) Before Tax

12.792

4.051

Revenue generated during the 2nd

quarter of 2013 represents share from sales of Joint Venture

Project with SLRDI and accretion of interest from installment sales of non-operating assets and

sales from joint venture project.

Liquidity and Capital Resources

As mentioned above that in spite of losses incurred by the Company due to prolonged pre-

operating status, the Company remains to be stable because of its large amount of resources not

only on the Company’s assets but also the support of its stockholders.

PARTICULARS

As at end of

June 30, 2013

(in Million)

As at end of

June 30, 2012

(in Million)

Total assets as at end of 1,490.085 1,204.047

Total liability as at end of 286.663 34.902

Ratio of assets to Liability 0.192% 0.029%

Financial condition

Cash and cash equivalent 14.439 26.971

Receivable – net 201.793 153.704

House & lot available for sale 6.318 6.318

Real estate for sale & dev’t 1,102.297 835.165

Property and equipment 20.464 22.847

Deferred income tax assets 16.627 19.442

Investment property 5.444 5.444

Available-for-sale Investments 2.370 1.370

Other Assets 119.704 132.784

Accounts payable & accruals 286.663 34.902

Stockholders’ equity 1,203.422 1,169.145

The decrease in cash and cash equivalent is attributable to the net cash flows used by the Company

in its regular operating activities.

Movement in receivable is attributable to collection of receivable from sales with joint venture

project and other receivable.

The decrease in real estate for sale and development is attributed to the accounting cost of lots sold

during the period.

The decrease in property and equipment is brought about by the normal provision for an estimated

depreciation using straight line method.

No movement in deferred income tax assets.

Movement in available-for-sale investments is the normal accounting of provision for unrealized

valuation of AFS.

26

The movement of other assets accounts is attributed to the memorandum of agreement (MOA) with

related party for a possible land purchase approximately 50 hectares in SJDM for future

development. It will be on a term sale and will be using funds from the current JVA to purchase the

property.

The decrease in accounts payable and accruals is attributed to regular accruals and as well as

deferred payments.

The loans payable amounting P=2,619 million are non-interest bearing. Funds were obtained for the

acquisition of two (2) parcels of land included in the “real estate for sale and development account”

in the 2012 statement of financial position.

The increase in Stockholder’s Equity is attributed to normal operational income in the real estate

business starting year 2007, when the commercial activity of Joint Venture Project was officially

launched.

Total lots sold during the six months is Sixty One Thousand Three Hundred Forty Five (61,345)

square meter, Thus the Company has already sold a total area of Seven Hundred Forty Six

Thousand Two Hundred Seventy Seven (746,277) square meter as of June 30, 2013.

On the revenue side, the company has posted a net profit (after tax) of P14.535 Million in the six

(6) months period ending June 30, 2013 as compared with the P6.748 million in 2013 of that same

period. The deficit stands at P511.933 million and P546.210 million as of June 30, 2013 and 2012,

respectively.

The Company posted an increase in Stockholder’s Equity which is P=1,203.422 million as of June

30, 2013 compared to P=1,169.144 million as of June 30, 2012, the increase is attributed to the

normal operational income in the real estate business.

There is a decreased in cash and cash equivalent balances amounting to P=14.43 million as of June

30, 2013 compared with that P=26.971 million on June 30, 2012. The increased cash and cash

equivalent is attributable to the net cash flows used by the Company in its regular operating

activities.

A movement in the receivable was also posted from P=201.7924 million as of June 30, 2013

compared to P=153,703 million on June 30, 2012. The said movement is attributed to the

recognition of current and non-current receivable from sales with Joint Venture project and other

receivables.

There is also an increased in real estate for sale and development which is P=1,109.245 million as of

June 30, 2013 compared with that P=841.483 million as of June 30, 2012, the nature of the

increased is specifically attributable to the cost of parcels of land purchased from Don Manuel

Corporation on August 24, 2012, and from BDO Strategic Holdings, Inc. on December 19, 2012

with BDO Strategic Holdings, Inc., details of which have been described above net of lots sold by

the joint venture during the period.


The business opportunity in the first quarter of 2011 has surged down as an overall effect of

international economy slowdown due to political instability in the Middle East resulting to oil price

hike. The said uncertainties have significantly affected domestic products and business. However,

the management believed that based on economic analysis our economy will be able to recover in

few months time.

Total lots sold during the six months is Forty One Thousand Four Hundred Twenty One (41,421)

square meter. Thus the Company has already sold a total area of Six Hundred Eighty Four

Thousand Nine Hundred Thirty Two (684,932) square meter as of June 30, 2012.

27

The Company has posted a net profit (after tax) of P=6.748 Million in the first six months of 2012 as

compared with the P=2.021 million in 2011 of that same period.

The deficit stands at P=546.210 million and P=552.959 million as of June 30, 2012 and 2011,

respectively.

The Company posted an increase in Stockholder’s Equity which is P=1,169.144 million as of June

30, 2012 compared to P=1,161.877 million as of June 30, 2011, the increase is attributed to the

normal operational income in the real estate business.

There is an increase in cash and cash equivalent balances amounting to P=26.971 million as of June

30, 2012 compared to P=32.753 million on June 30, 2011. The increased cash and cash equivalent is

attributable to the net cash flows used by the Company in its regular operating activities.

A movement in the receivable was also posted from P=153.704 million as of June 30, 2012

compared to P=203,393 million on June 30, 2011. The said movement is attributed to the

recognition of current and non-current receivable from sales with Joint Venture project and other

receivables.

There is also a decrease in real estate for sale and development which is P=841.483 million as of

June 30, 2012 compared with P=924.921 million as of June 30, 2011, the nature of the decrease is

specifically attributable to the cost of lots sold.

Material Changes to the Balance Sheet as of December 31, 2013

Compared to December 31, 2012 (Increase/Decrease of 5% or more)

The Company’s total assets decreased at P=1,482,068,780 in year 2013, as compared with P=

1,492,042,253 in 2012. The change from the total assets is attributable to the cost of sold during

the year.

Cash balance of P=17.729 million as at end of December 31, 2013 as compared to P=15.052 million

in 2012, cash with banks earns interest at the respective bank deposits. Short-term investments are

made for varying periods up to three (3) months depending on the immediate cash requirements of

the Company and earn interest at the respective short-term deposit rates. Interest income earned

from cash in bank and short-term investments amounted P=92,057.00, P=335,006.00, and P=

343,375.00 for the years ended December 31, 2013, 2012 and 2011 respectively. The movement of

cash is attributable to the net cash flows generated by the Company in its operating activities.

Receivables increased by 8.91% from P=166.153 million in 2012 as compared to that P=180.950

million 2013. Trade receivables mainly represent the Company’s outstanding balance in its share

in the sale of real estate by SLRDI. Collections of interests and penalties arising from late payment

of these receivables are recognized as part of “Others” in the “Revenue and Other Income” section

in the statements in comprehensive income. Installment receivables pertain to uncollected portion

of the amount arising from the sale of non-operating properties in 2005. The contract price is

collectible in fixed monthly payment of P=2.00 million starting January 24, 2006. Installment

receivables were discounted using the credit-adjusted risk-free rates prevailing at the time of the

sale which resulted to an effective interest rate of 9.45%. Interest income from accretion

recognized in 2013, 2012 and 2011 amounted to P=0.08 million, P=0.20 million and P=1.42 million,

respectively. The Company recognizes full allowance on these receivables while they are currently

on the process of renegotiating with the management of Platinum Group Metal Corporation

(PGMC) with respect to the settlement of the outstanding balance of the installment receivables.

The Real Estate for Sale and Development decreased from P=1,157,778,227 million and P=

1,117,236,418 million in 2012 and 2013 respectively. The movement in the Real Estate for sale

28

and development is attributable to the cost of sold during the period. As of June 30, 2014, the

residential areas of Phase 1, Phase 2, Phase 3 and the Country Club are 97%, 98%, 72% and 98%

completed, respectively, based on the physical completion report provided by the joint venture’s

supervising engineer.

A decrease in the Property and Equipment account pertains to the recognition of depreciation

expense by the Company amounting to P=2.949 million partially offset by acquisition of additional

property and equipment in the amount of P=1.334 million.

There is 29.66% decreased in accounts payable and accrued expenses account due to the

realization of clients deposits, accounting of cost of lot purchased on installement and as

well as normal recording of accrual of payables vis-a-vis payments.

The movement of Output VAT account represents normal recording of Input and Output

VAT.

There were no movements in the number of issued shares in the year 2013.

The Company recorded a net income (before income tax) in the amount of P=33.837 million

in 2013 compared with P=41.422 million in 2012.



There is 31.71% decreased in cash and cash equivalents from P=22.041 million in 2011 compared to

P=15,052 million in 2012 due to the net cash flows generated by the Company from its operating

activities.

There is 39.35% increased in receivables mainly due to the movement of sales on installment of

Joint Venture. The total gross amount of individually impaired receivables amounted to P=55.174

million as of December 31, 2012. These receivables were fully provided with allowance for

impairment losses. The current installment receivables consist of amounts arising from sale of non

operating properties in 2005 and repayable in fixed monthly payment of P2.0 million beginning

January 24, 2006 up to October 24, 2011. The installment receivable was discounted using the

credit-adjusted risk-free rates prevailing at the time of the sale which resulted to an effective

interest rate of 9.45%. The trade receivables are receivable from individual lot buyers of joint

venture project with various payment terms. Other receivable such as advances for liquidation,

advances to suppliers and others are non-interest bearing and are due within 12 months from

balance sheet date.

There is an increased by 39.35% in the real estate for sale and development account the said

movement was resulted by the acquisition of parcels of land net of cost of lot sold for the year

ended December 31, 2012.

There is 10.78% decrease in Property and Equipment account due to the recognition of

depreciation expense by the Company amounting to P=2.872 million partially offset by acquisition

of additional property and equipment in the amount of P=0.401 million during the year.

There is 40.85% decreased in the other assets account the of which was brought about by the

liquidation of land banking fund representing full down payment of parcels of land purchase on an

installment terms from Don Manuel Corporation and BDO Strategic Holdings, Inc. details of

which have been described above.

29

There is an increased in accounts payable and accrued expenses in the amount of 304.268 million

as at end of December 31, 2012 as compared with P40.935 million in 2011, the nature of said

increased was the recognition of payables from the cost of parcels of land on an installment net of

accruals vis-a-vis payments.



The Company recorded a net income (before income tax) in the amount of P=41.418 million in

2012 compared with P=4.096 million in 2012.



There is 11.44% increase in cash and cash equivalents from P=19,779 million in 2010

compared to P=22,041 million in 2011 due to the net cash flows generated by the Company

in its operating activities.

There is 10.09% increase in Receivables is due mainly to the movement of sales on

installment of Joint Venture. The total gross amount of individually impaired receivables

amounted to P=37.632 million as of December 31, 2010 and 2011. These receivables were

fully provided with allowance for impairment losses both in 2010 and 2011. The current

installment receivables consist of amounts arising from sale of non operating properties in

2005 and repayable in fixed monthly payment of P2.0 million beginning January 24, 2006

up to October 24, 2011. The installment receivable was discounted using the credit-

adjusted risk-free rates prevailing at the time of the sale which resulted to an effective

interest rate of 9.45%. The advances to a stockholders, officers and employees, suppliers

and others are non-interest bearing and are due within 12 months from balance sheet date.

There is 6.80% decrease in the real estate for sale and development yielded from the sales

of property in relation to the Joint Venture Development with SLRDI. The decline

represents the cost of lot sold for the year ended December 31, 2011.

There is 10.78% decrease in Property and Equipment account due to the to the recognition

of depreciation expense by the Company amounting to P=3.092 million partially offset by

acquisition of additional property and equipment in the amount of P=0.162 million.

There is 40.00% decreased in accounts payable and accrued expenses account due to the

realization of clients deposits, accounting of cost of lot purchased on installement and as

well as normal accounting and recording of accrual of payables vis-a-vis payments.



The Company recorded a net income (before income tax) in the amount of P=4.096 million

in 2011 compared with P=16.692 million in 2010.

30

Material Changes to the Statements of Income as of December 31, 2013


There is 14.97% decreased in real estate revenues in 2013 compared to that of 2012 which is

attributed primarily on the marketing strategy being implemented by the Company which some of

inventory is put on-hold (temporarily) to sell/market awaiting for much better price.

There is 68.33% decrease in Interest Income in 2013 compared to that of 2012 which is due to the

declining of the installment receivable of non-operating assets.

There is 37.86% increased in Other Income in 2013 compared to that of 2012 the increase is

attributed to the accounting of penalties and surcharges from installment receivable from sales of

real estate.

There is 3.50% decreased in the cost of Real Estate for Sale and Development in 2013 compared to

that of 2012 which is due primarily to the cost of lots sold during the year.

There is 2.39% increased in Administrative Expenses in 2013 compared to that of 2012 which is

due primarily to normal economic trend during the year.

There is 889.08% increased in Interest Expense in 2013 compared to that of 2012 detail of which is

the recognition of accretion of installment payable from acquired parcels of land purchase on

installment terms. The said parcels of land acquired on installment has been full paid in the second

quarter of 2014.

There is 0.14% increased in Benefit from Income Taxes in 2013 compared to the year 2012 which

is due to the accounting of allowance for impairment losses on installment receivable from sale of

non-operating assets

Overall, the Company posted net income before tax of P=33.837 Million for the year ended

December 2013 as compared with the P=41.422 Million in 2012.



There is 53.31% increased in real estate revenues in 2012 compared to that of 2011 which is

attributed primarily to the completion percentage of its Joint Venture Agreement with SLRDI and

economic market trend.


declining of the installment receivable of non-operating assets.

There is 639.78% increased in Other Income in 2012 compared to that of 2011 the increase is


real estate.

There is 2.49% increased in Real Estate Cost of Sales in 2012 compared to that of 2011 which is

due primarily to the increased in the total number of lots sold during the period.

There is 55.372% increased in Administrative Expenses in 2012 compared to that of 2011 which is

due primarily to the recognition of allowance for impairment losses on installment receivable from

sale of non-operating asset and other economic cycle and trend during the year.

31

There is 301.14%% increased in Interest Expense in 2012 compared to that of 2011 which is due to

recognition of accretion of installment payable from acquired parcels of land purchase on

installment terms.

There is 140.09% decreased in Benefit from Income Taxes in 2012 compared to the year 2011

which is due to the accounting of allowance for impairment losses on installment receivable from

sale of non-operating assets

Overall, the Company posted a gain in the net income of P=26.490 Million for the year ended




There is 12.98% decrease in real estate revenues in 2011 compared to that of 2010 which is

attributed primarily to the decrease in project completion percentage of its Joint Venture

Agreement with SLRDI and economic market trend.


decrease in the installment receivable from sale of non-operating asset.

There is 2,123% increase in Other Income in 2011 compared to that of 2010 the increase is


real estate.

There is 6.22% decrease in Real Estate Cost of Sales in 2011 compared to that of 2010 which is

due primarily to the decrease in the total number of lots sold during the period.

There is 0.62% increase in Administrative Expenses in 2011 compared to that of 2010 which is

due primarily to the recognition of allowance for impairment losses on installment receivable from

sale of non-operating asset.

There is 54.62%% increase in Interest Expense in 2011 compared to that of 2010 which is due to

accounting of accretion of installment payable of acquired assets.

There is 56.55% increase in Benefit from Income Taxes in 2011 compared to the year 2010 which

is due to the accounting of allowance for impairment losses on installment receivable from sale of

non-operating assets

Overall, the Company posted a gain in the net income of P=2.541 Million for the year ended


Capital Expenditure

There was no capital expenditure for the period under review.

Key Performance Indicators

The Company operates in one business segment, the real estate. The following Key

Performance Indicators were adopted by the Company in order to measure the profitability

of the Company and to provide management with a measure on the financial strength,

liquidity and ability to maximize the value of its stockholders’ investments.

32

As of

December 31, 2013

As of

December 31, 2012

Current Ratio (1) 33. 227 : 1 43.263 : 1

Debt-to-Equity Ratio (2) 1 : 0.023 1 : 0.043

Assets-to-Equity Ratio (3) 1 : 1.234 1 : 1.025

Earnings per Share (4) 1 : 0.0082 1 : 0.0017

Earnings before interest

and Income Tax (5)

P33.837 Million

P41.422 Million

Return on Equity (6) 1 : 1.0773 1 : 1.022

1) Current Assets / Current Liabilities

2) Total Liabilities / Stockholders’ Equity

3) Total Assets / Stockholders' Equity

4) Net Income / Outstanding Shares

5) Net Income (inclusive of Interest Expenses & Provision for Income Tax)

6) Net Income / Stockholder’s Equity

Stockholders’ Equity

Total Stockholders’ Equity in 2013 is P=1,200,765,387 (Issued and paid of 1,561,110,070.00

shares with P1.00 par value)

Total Stockholders’ Equity in 2012 is P=1,191,484,510 (Issued and paid of 1,561,110,070.00

shares with P1.00 par value)

Other Matters

(a) The interim financial report have been prepared in conformity with generally accepted

accounting principles in the Philippines

(b) No disclosures nor discussions were made for the following since these did not affect the

past and present operations of the Company:

(c) No known trends, events or uncertainties with significant impact on net sales, or income, or

have material impact on liquidity that would trigger direct or contingent liability, including

default or acceleration of obligation rather than what was mentioned in the Plan of Operation.

(d) Significant elements of income or loss that did not arise from the Company’s continuing

operations other than what was mentioned in the revenues.

(e) All accounting policies and methods of computation and estimates are followed in the

interim financial statement as compared with the most recent annual financial statement report.

(f) There were no seasonality or cyclicality aspects that have material effect in the financial

statement and the financial condition or results of operations during the period.

(g) There were no material commitments affecting assets, liabilities, equity, net income, or

cash flows that are unusual during the interim financial report.

(h) There were no nature and amount of changes in estimates of amounts reported in prior

interim periods of the current financial year or changes in estimates of amounts reported in

prior financial years that have a material effect in the current interim period.

33

(i) There were no issuance, repurchases, and repayment of debt and equity securities, except

for the payment of non-interest bearing payable obtained for the acquisition of two (2) parcels

of land recorded under “real estate for sale and development account” in year 2012 statement

of financial position.

(k) There were no Dividends paid during the interim financial period.

(l) The Company is reporting with only one (1) accounting segment.

(m) There were no material events that occurred during the subsequent to interim reporting

period that have not been reflected in the financial statements, such as default or acceleration

of an obligation or off-balance sheet transactions, arrangements, obligations, and other

relationship of the company with unconsolidated entities or other persons created during the

reporting period.

(n) There were no changes in the composition of the issuer during the interim period, No

business combinations, acquisitions or disposal if subsidiaries and long-term investments,

restructurings, and discontinuing operation during the interim period.

(o) There were no changes in contingent liabilities or contingent asset made during the interim

period as compared with the most recent annual balance sheet date.

(p) No disclosures in compliance with SEC MC No. 14, Series of 2004 specifically Certain

Relationship and Related Transaction or arrangements, as there were no such transaction

during the period and or subsequent event occur after the close of the accounting period with

respect to certain relationship or related transaction being required by SFAS/IAS No. 24.

(q) There were no events that will trigger director contingent financial obligation that is

material to the company, including any default or acceleration of an obligation that need to

Disclose.

(r) There were no material off-balance sheet transactions, arrangements obligations (including

contingent obligations), and other relationships of the Company with unconsolidated entities or

other persons created during the reporting period.

(s) The were no reclassification on Financial Instruments in the current reporting period and

previous periods.

(t) PFRS 9, as issued, reflects the first phase on the replacement of PAS 39 and applies to

classification and measurement of financial assets and financial liabilities as defined in PAS

39. In subsequent phases, hedge accounting and impairment of financial assets will be

addressed with the completion of this project. The adoption of the first phase of PFRS 9 will

have an effect on the classification and measurement of the Company’s financial assets, but

will potentially have no impact on classification and measurements of financial liabilities. The

Company will quantify the effect in conjunction with the other phases, when issued, to present

a comprehensive picture.

(u) The Company’s Interim financial statements prepared in accordance with PFRS require

management to make judgments and estimates that affect amounts reported in the financial

statements and related notes. The judgments and estimates used in the financial statements are

based upon management’s evaluation of relevant facts and circumstances as of the date of the

interim financial statements.

34

(v) Judgments and estimates are continually evaluated and are based on historical experience

and other factors, including expectations of future events that are believed to be reasonable

under the circumstances.

(w) There were no material changes in financial condition and results of operation in the

interim report of the Company for the quarter ending June 30, 2012 from the compliance of the

PFRS.

Financial Risk Management Objectives and Policies

The Company’s principal financial instruments comprise of cash and bank loans. The main

purpose of these financial instruments is to finance the Company’s operations. The Company

has other financial instruments such as receivables, accounts payable and accrued expenses

which arise directly from its operations. The main risks arising from the Company’s financial

instruments are liquidity risk, credit risk and interest rate risk. As at end of June 30, 2014 and

2013, the Company is not exposed to any significant foreign currency risk because all of its

financial instruments are denominated in Philippine peso. The BOD reviews and approves the

policies for managing each of these risks and they are summarized below.

Liquidity Risk

The Company seeks to manage its liquid funds through cash planning on a monthly basis. The

Company uses historical figures and experiences and forecasts from its collection and

disbursement.

As of June 30, 2014

On demand

Accounts payable and accrued expenses P=39,785,515

Deposits on subscription 120,746,957

Others 15,277,575

Total P=175,810,047

Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a

financial instrument fails to meet its contractual obligations, and arises principally from the

Company’s receivables.

Concentrations arise when a number of counterparties are engaged in similar business

activities, or activities in the same geographic region, or have similar economic features that

would cause their ability to meet contractual obligations to be similarly affected by changes in

economic, political or other conditions. Concentrations indicate the relative sensitivity of the

Company’s performance to developments affecting a particular industry or geographical

location.

The Company’s principal credit risk is its dependence on one-counterparty. The credit risk of

the Company is controlled by the approvals, limits and monitoring procedures. It is the

Company’s policy to enter into transactions with creditworthy parties to mitigate any

significant concentration of credit risk. The Company ensures that credit transactions are made

to parties with appropriate credit history and has internal mechanism to monitor granting of

credit and management of credit exposures. The Company’s maximum exposure to credit risk

is equal to the carrying amount of its financial assets.

The Company sets up provision for impairment of accounts receivables equal to the balance of

long-outstanding accounts receivables. The balance of long-outstanding accounts receivables

35

subjected to the full allowance for doubtful accounts amounted to P=55.252 million as at end of

June 30, 2014.

Receivables that are neither past due nor impaired are due from creditworthy counterparties

with good payment history with the Company. Except for the receivable from the sale of non-

operating assets which Company is currently in discussion with the management of Platinum

Group Metal Corporation (PGMC) with respect to the existing terms of the installment

receivable

Cash with banks are deposits made with reputable banks duly approved by the BOD.

Interest Rate Risk

The Company’s exposure to the risk pertains to bank loans. The Company relies on budgeting

and forecasting techniques to address this risk.

Capital Management

the primary objective of the Company’s capital management is to ensure that it maintains a

strong credit standing and stable capital ratios in order to support its business and maximize

shareholder value.

The Company manages its capital structure and makes adjustments to it, in light of changes in

economic conditions. To maintain or adjust the capital structure, the Company may adjust the

dividend payment to shareholders, return capital to shareholders or issue new shares. No

changes were made in the objectives, policies or processes during the six months period ended

June 30, 2014.

The following table pertains to the account balance the Company considers as its core capital

as at end of June 30, 2014.

Capital stock . . . . . . . . . . . . . . . . . . .P=1,561,110,070

Capital surplus . . . . . . . . . . . . . . . . . 154,395,374

Total . . . . . . . . . . . . . . . . . . . . . . . . .P=1,715,505,444

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of

financial instruments for which it is practicable to estimate such values:

Cash and Receivables. The carrying amounts of cash and receivables approximate fair values

primarily due to the relatively short-term maturity of these financial instruments. In the case of

long-term receivables, the fair value is based on the present value of expected future cash

flows using the applicable discount rates. The discount rates used range from 5.02% to 5.00%

in 2013 and 5.66% to 5.66% in 2012.

Cash with banks are deposits made with reputable banks duly approved by the Board of

Directors.

The following methods and assumptions were used to estimate the fair value of each class of

financial instruments for which it is practicable to estimate such values:

36

MARKET PRICE AND DIVIDENDS ON THE COMPANY’S COMMON EQUITY

The shares of the Company are listed and traded at the Philippine Stock Exchange. The high

and low closing prices of the Company’s share for each quarter within the last three (3) fiscal

years are as follows:

The closing prices of the Company’s share are of the latest practicable trading dates are as follows

DIVIDENDS

No dividends, either in cash or stock, were declared on the shares for the last three (3) fiscal years, i.e.,

2013, 2012, 2011. There are no restrictions that limit the ability to pay dividends on common equity

but the Company, as a general rule, shall only declare from surplus profits as determined by the Board

of Directors as long as such declaration will not impair the capital of the Company.

RECENT SALES OF UNREGISTERED SECURITIES

No sales of unregistered securities or exempt securities including recent issuance of securities

constituting an exempt transaction on shares of the Company were sold during the last three (3) years.

YEAR QUARTER HIGH

(in Php)

LOW

(in Php)

2011 First 0.332 0.328

Second 0.315 0.315

Third 0.554 0.441

Fourth 0.485 0.476

2012 First 0.672 0.571

Second 0.701 0.685

Third 0.615 0.594

Fourth 0.787 0.702

2013 First 1.594 1.326

Second 1.969 1.857

Third 1.521 1.487

Fourth 1.418 1.364

2014 First 1.603 1.500

Second 1.740 1.725

YEAR MONTH/DATE CLOSING (in Php)

2014 January 31 1.45

February 28 1.49

March 31 1.73

April 30 1.71

May 31 1.68

June 27 1.69

July 31 1.51

August 28 1.50

September 05 1.46

37

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

Information on Independent Accountant and other Related Matter

1. External Audit Fees and Services

a) Aggregate fees billed for the last three (3) years of Audit fee are P=500,000.00, P=500,000.00, P=

500,000.00 for the years 2013, 2012 and 2011 respectively. Conducting a seminar for free to

introduce the implementation of the Accounting Financial Standards (AFS) and the Philippine

Financial Reporting Standards (PFRS).

b) Audit professional fees were subjected to a 12% VAT

c) No other fees except for the regular audit service fee

d) All policies governing the audit procedures were duly approved by the audit committee.

2. The Company has no disagreement with the SGV & CO. regarding matters of accounting principle

practice, auditing scope and procedure.

CORPORATE GOVERNANCE

The Company has promulgated a Manual on Corporate Governance that took effect in 2002 and

amended on 2014. The Manual continues to guide the activities of the Company and compliance

therewith has been consistently observed.

There has been no deviation from the Company’s Manual on Corporate Governance.

The Company believes that its Manual on Corporate Governance is in line with the leading

practices and principles on good governance, and such, is in full compliance.

The Company will improve its Manual Corporate Governance when appropriate and warranted, in

the Board of Directors’ best judgment. In addition, it will be improved when a regulatory agency

such as the SEC requires the inclusion of a specific provision.

The Board

There is an effective and appropriately constituted Board who received relevant information

required to properly accomplish their duties.

The Nomination Committee is mandated to ensure that there is a formal and transparent procedure

for the appointment of new Directors of the Board. Where appropriate, every director receives

training, taking into account his individual qualifications and experience. Training is also available

on an ongoing basis to meet individual needs.

The term of office of all directors, including independent directors and officers shall be one (1)

year and until the successors are duly elected and qualified.

Board Process

Members of the Board meet when necessary throughout the year to adopt and review its key

strategic and operational matters, approve and review major investments and funding decision,

38

adopt and monitor appropriate internal control, and ensure that the principal risks of the Company

are identified and properly managed.

The Board worked on an agreed agenda as it reviews the key activities of the business.

The Corporate Secretary is responsible to the Board and is available to individual Directors in

respect of Board procedures. Atty. Christine P. Base holds the post.

Committees

The Board has established a number of committees with specific mandates to deal with certain

aspects of its business. All of the Committees have defined terms of reference.

Audit Committee

The Audit Committee functions under the terms of reference approved by the Board. It meets at

least twice a year and its roles include the review of the financial and internal reporting process,

the system of internal control and management of risks and the external and internal audit process.

The Audit Committee reviews the scope and results of the audit with external auditors and obtains

external legal or other independent professional advice where necessary.

Other functions of the Audit Committee include the recommendation of the appointment or re-

appointment of external auditors and the review of audit fees.

Nomination Committee

The Committee assesses and recommends to the Board candidates for appointment of executive

and non-executive directors positions. The Committee also makes recommendations to the Board

on its composition. The Committee meets as required.

Remuneration Committee

The Remuneration Committee is responsible in determining the Company’s policy on executive

remuneration and in specifying the remuneration and compensation packages on the employment

or early termination from office of each of the executive directors of the Company. All decisions

of the Remuneration Committee are only recommendatory and they are referred to the Board for

final approval. The Remuneration Committee also monitors the compensation packages of other

senior executives in the group below the Board level. The Committee meets as required.

Compliance Officer (CO)

The CO is responsible for ensuring that the Company’s corporate principles are consistently

adhered to throughout the organization. The CO acts independently and her role is to supply the

top management with the necessary information on whether the organization’s decisions comply

with professional rules and regulations, internal directives, regulatory authorities, and the statutory

law.

39

The top twenty (20) stockholders as the Company as of August 31, 2014 are the following:

STOCKHOLDERS CITIZENSHIP SHARES PERCENTAGE

01) ) PCD Nominee Corporation Filipino 757,257,872 48.51%

02) Carmel Development, Inc. Filipino 499,999,997 32.03%

03) Gamma Properties, Inc. Filipino 264,472,892 15.78%

04) Olongapo Mabuhay Express Corp Filipino 124,855,422 8.00%

05) Brand Realty Corporation Filipino 13,725,404 0.88%

06) PCD Nominee Corporation Other alien 7,476,410 0.48%

07) Seafront Resources Corporation Filipino 3,756,788 0.24%

08) MJ Soriano Trading, Inc. Filipino 2,221,000 0.14%

09) Pedro O. Tan Filipino 870,000 0.06%

10) Ruby D. Roa Filipino 588,599 0.04%

11) Teresita Dela Cruz Filipino 528,458 0.03%

12) Ma. Cristina De La Paz Filipino 525,000 0.03%

13) Flora Pascual Filipino 493,720 0.03%

14) Leonides Francisco Balmeo Filipino 425,000 0.03%

Lovell Redondo Bautista Filipino 425,000 0.03%

15) Luis V. Ongpin (ITF Luis M. Ongpin) Filipino 411,000 0.03%

16) Pan Malayan Mgt & Invst Group Filipino 392,727 0.03%

17) Paolo Tuason Filipino 376,500 0.02%

18) EBC Securities Corporation Filipino 300,000 0.02%

19) Rosanna Isabel Fores Filipino 255,000 0.02%

20) Florentino M. Herrera III Filipino 241,102 0.02%

Sub-total 1,551,124,999 98.36%

Other stockholder’s 9,985,071 0.64%

Total Number of Shares 1,561,110,070 100.00%

ARANETA PROPERTIES, INC.

General Notes to the Financial Statement

1) Araneta Properties, Inc. is incorporated in the Philippines to acquire, own, hold, improve,

develop, subdivide, sell, lease, rent, mortgage, manage and otherwise deal in real estate or any

interest therein, for residential, commercial, industrial and recreational purposes, as well as to

construct and develop or cause to be constructed and developed on any real estate or other

properties, golf course, buildings, hotels, recreation facilities and other similar structures with their

appurtenances; and in general, to do and perform any and all acts or works which may be

necessary or advisable for or related incidentally or indirectly with the aforementioned business or

object of the Company. The Company is listed in the Philippine Stock Exchange (PSE) and has

been included in the PSE Composite index since November 14, 1989.

2) The Company is operating in only one business segment. The number of employee was 52, 53,

and 53 as at end of second quarter of 2014, 2013 and 2012 to perform any and all acts or work

which may be necessary or advisable for or related directly or indirectly of the aforementioned

business or objective of the Company. The registered office address is 21st Floor, Citibank Tower

Paseo de Roxas, Makati City.

3) The Company has commenced regular activities of its real estate business on June 5, 2005 after

recovering from the regional crisis that hit the real estate industry in 1997. The Company together

with SLRDI began their activities based on their joint venture agreement dated June 5, 2003.

Under the agreement, SLRDI will prepare and develop certain parcels of land owned by the

Company at its own cost. The Company is responsible for the delivery of the parcels of land free

40

from liens and encumbrances including any claims of tenants or third parties and from any form of

litigation. The joint venture project shall consist of the development of an exclusive mixed-use

residential - commercial subdivision with a country club. Once developed, the property will be

shared by the parties either through cash or lot overrides. The Company shall receive 40% of the

net sales proceeds, in case of cash override, or 40% of the saleable lots, in case of a lot override

while SLRDI shall receive 60% of the net sales proceeds or the saleable lots. The Company plans

to receive its share in joint venture operation through a cash override.

Summary of Significant Accounting Policies

Basis of Preparation

1) The accompanying financial statement has been prepared under the historical cost basis, except

for the AFS financial assets which are carried at fair value. The financial statements are presented

in Philippine peso, which is the Company’s functional and presentation currency.

2) The Company’s financial statement has been prepared in accordance with the Philippine

Financial Reporting Standards (PFRS).

3) The accounting policies adopted are consistent with those of the previous financial year except

for the adoption of new and revised standards and interpretations from the International Financial

Reporting Interpretations Committee.

A COPY OF THE COMPANY’S ANNUAL REPORT ON SEC FORM 17-A WILL BE PROVIDED

WITHOUT CHARGE TO EACH PERSON UPON WRITTEN REQUEST OF ANY SUCH PERSON

ADDRESSED TO:

THE OFFICE OF THE CHIEF FINANCE OFFICER

ARANETA PROPERTIES

21st Floor, Citibank Tower, Paseo de Roxas, Makati City, Philippines

Documents

ARANETA PROPERTIES INCORPORATED INFORMATION … › pdf › ARA DIS 2014 (v.4) FILED COPY(2).pdfGregorio Ma. Araneta III Filipino 264,472,892 Direct 15.78% PCD Nominee Common Various